Seven ways to save mainstream media

KeallHauled

Chris Keall

Jeff Bezos

Tim Hunter on the NZME/Fairfax merger

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1. Paywalls

In the manner of a marine drill sergeant knocking his squad’s egos down to size, my journalism tutor Jim Tucker used to ask the class why most people bought newspapers.

From previous attempts to battle-harden us against cruel reality, we already knew the answers.

“The weather.”

“The crossword.”

“The classifieds.”

“The horoscopes.”

“TV listings.”

The harsh truth is that there were never many people willing to pay for general news, in and of itself. It was never a viable business model, even in the golden age of newspapers

As previously canvassed, paywalls are a goer for the likes of NBR and Consumer and any who offer news and can use for your economic benefit and, yes, expense.

Some publishers want to believe that a paywall can help make up for tanking circulation and cratering ad revenue in mainstream media, too.

But today, of course, there are multiple sources for the diversions mentioned above, and many free sources of news. And a good chunk of people who do follow general news, and who could easily afford to pay a small sum for it, become indignant when asked to take out a subscription. RNZ doesn't ask them to pay! Etc.

VIABILITY: Fuhgeddaboudit


2. Advertising

We went here last week. To quickly recap: Google and Facebook are eating everybody's lunch, leading to shockingly low ad figures for Fairfax and NZME (see the table near the top of this story).

VIABILITY: Are you having a laugh?


3. Gathering data about your users for targeted ads

A second best to a paywall. You don't charge your users but you offer them incentives to register so you can gather demographic data about them for better-targeted ads (that is, ads that can be sold for better money).

The hero here is Buzzfeed (name-checked in the Fairfax-NZME merger application), which tracks which stories you click on so it can guesstimate your age, sex and income etc even if you can't (like most) be bothered filling in an online registration.

There are two problems here: One, you come up against Google and Facebook. NBR has recently been doing some promoted tweets to promote its new 30-day free trial and $35 a month offers. It's scary and amazing the degree of detail that Facebook will serve up if you want to, say, target people by town and/or profession.

Fairfax and NZME are quite correct that US-based Buzzfeed is also handy at this sort of thing, and in capturing a mass audience with its news – inevitably presented in snackable or listicle fashion.

But look at its bottom line: Last year, Buzzfeed generated $US170 million revenue (according to a paywalled Financial Times report) from its 181 million users. That was a 32% miss, and the Times says internal documents point to another big miss this year. Buzzfeed is said to be barely breakeven (the company would not comment on the Times report, other than to say it was "incorrect").

Buzzfeed is growing its audience rapidly but it seems not fast enough to keep up with an ever-meaner online advertising market, with developments like programmatic selling and the rise of mobile ads, which typically have half the yield of (already bargain-basement) regular online ads.

VIABILITY: Buzzfeed's financials reveal the answer – "no"


4. Find a sugar daddy.
Amazon chief executive Jeff Bezos swooped in to buy The Washington Post for $US250 million in 2013.

And in a smaller scale deal, Red Sox owner and billionaire John Henry bought the Boston Globe in the same year.

After seven years of revenue decline, the Graham family said it was not certain the paper would survive unless it sold out to Mr Bezos.

The Amazon boss – who bought the paper in a personal capacity – said he understood the crucial role the media plays in a democracy and promised not to interfere.

Nevertheless, he must make WP editors nervous at times, given he’s such a newsmaker. Amazon is always in the tech and business media: pushing the limits in book deals with publishers, jostling with all-comers as it introduces same-day delivery in the US; taking on Netflix with its Prime; including the recent controversy over alleged workplace bullying. And <r Bezos himself is involved in everything from private aerospace adventures to a feud with Donald Trump.

The Washington Post has not disclosed any financials in the Bezos era.

But its new owner can absorb a few years of losses. Forbes estimates his wealth (easily calculated since most of it is in Amazon shares) at $US63 billion or $NZ87 billion (just pause and think about that number for a minute).

Nevertheless, a new CEO installed by Bezos has run the paper like a business. A couple of small regional papers under the Post umbrella have been closed, and a paywall introduced for the main product (albeit a soft, metered one).

A liberal columnist left, and a conservative blogger arrived but checking in on the op-ed section this weekend (where Republican Speaker Paul Ryan is criticised for abandoning his brief crusade and buckling to Donald Trump, and "Islamaphobia" is decried, it seems a lively and independent environment).  There have been no reports of layoffs on the WP’s flagship product (a common theme before the Bezos takeover).

And throughout, traffic has gone up and up. According to ComScore, the WP had 76 million unique visitors in December, pushing it ahead of the New York Times.

With its accounts private, it is unknown if the paper has managed to turn this traffic surge into a profit. But Mr Bezos has said his main aim is to maintain the Post as a voice on the US national stage and pushing it on to the global stage. By that non-financial metric, the paper’s doing okay.

And over at the Boston Globe, the multi-award winning Spotlight investigative team (from the recent movie of the same name) is still going strong.

One a related note, Chinese billionaire Jack Ma's e-commerce company, Alibaba, bought Hong Kong's South China Morning Post in December last year. Ma said his aim was to maintain's the Post's independent voice, but some locals have complained the opposite has happened with the paper becoming a mouthpiece for the Chinese government.

VIABILITY Seems to be working in the US but does New Zealand have anyone of Mr Bezos' level of wealth and interest in the media? There are no obvious candidates.


5. Be entirely government-funded

It works for RNZ. The state broadcaster has a well-regarded news operation, which has lifted its game under chief executive Paul Thompson and money has been invested in online and cross-platform operations.

A number of staff and supporters don't like that its Crown funding has been frozen at the $35 million mark (or just under $40 million including other sources) since the 2011/12 financial year. But privately-owned mainstream news outfits have seen their revenue decimated over the same period.

VIABILITY: Works fine for RNZ but neither National nor Labour have any plans to extend media ownership by the state and neither should they.


6. Be owned by a trust

The Guardian is famously owned by the Scott Trust, which eschews profit in favour of reinvesting in better quality journalism (with a healthy serving of lefty op-ed).

In recent years, international editions have been added, and the paper's global audience has become massive.

Yet the Scott Trust has lost bucketloads of money over the past few years. Last year, it lost more than £1 million a week. 

The trust is not inexhaustible. This year, it is slashing ts funding by 20% or £53.6 million, which will likely mean around 20% of jobs will go.

To help mitigate the damage, The Guardian is asking readers to sign up to a scheme whereby you give a voluntary "supporter" payment of $4.99 per month.

VIABILITY: Faltering in the UK, no candidates in New Zealand


7. Be part government-funded

Metro founder Warwick Roger once said it should be anathema for media to accept money from the government it is supposed to be holding to account.

But if the alternative is going to the wall, it's arguably a different story.

NZ On Air — traditionally the Crown vehicle for funding RNZ, and certain shows on free-to-air TV — has recently widened its remit with its new Digital Media Fund which includes funding for online-only projects and dished out $600,000 last year. So far, that fund has been for creative projects only, but Fairfax, which hired the 3D investigative crew laid off by TV3, will be keeping a sharp eye on things as funding criteria continues to widen. [The original version of this article incorrectly stated that Fairfax had applied for online-only funding.]

And part of NZ on Air's new $1.3 million fund for "converged regional media" has also gone to online-focussed projects, including $400,000 for NZME and Very Nice Productions to fund stories about the regions and $396,821 for Allied Press, publisher of the Otago Daily Times to fund dedicated video journalists, again to focus on regional stories.

It's a way to help fund cross-platform adventures which can help cut costs for a company with interests across radio, TV and print, but which don't actually go any way toward pulling lost ad revenue back from Google and Facebook or (for mainstream news at least) pull in any new subscription revenue.

VIABILITY: It's a goer (sorry, Warwick)


POSTSCRIPT:

Some concepts that — if not seen as lifesavers — are at least seen helping to fill gaps in ad and circulation revenue:

Native content: Hipster ad execs know Millennials are all using ad blockers. How to reach them online. With native content! The cool, online-age name for the hoary old concept of advertorial, or making sponsored content look as much like real editorial as you can get away with. In print, this jape can work quite well. But online, where everything is more sharply measured, there's no hiding from the fact that  advertorial can rate very poorly (and then of course there's the age-old debate over trading short-term profit for long-term damage to your brand as an advertiser "borrows" some of your publication's credibility).

Neighbourly, Grabone: Dibs to APN for buying deal-of-the-day site GrabOne, and Fairfax for buying a half-share in community site Neighbourly. Both publishers are looking for a way to chase down lost classified advertising revenue, and GrabOne and Neighbourly are decent vehicles to do so (TradeMe was the best, but alas Fairfax just couldn't sustain the related debt). However, it's a case of chipping in rather than transforming revenue. Low barriers to entry and indirect competition from companies pushing deals through alternative platforms like Facebook has kept margins mean in the deal-of-the-day space. Groupon, the grand-daddy of daily deal sites, still loses money most quarters. And while Neighbourly seems to have genuine momentum, it's still not clear how it can be monetised, and it will be forever in competition with neighbourhood and community groups on Facebook.

Digital-only during the week: Scrapping print editions on weekdays makes sense. Weekend editions are where the money is, in NZ and overseas. It's already working well for a Canadian publisher. It will happen here, too. It's just a question of when. I give it 12 to 24 months for NZME and Fairfax papers. 

Clipping the ticket: US tech and consumer electronics site The Wirecutter has won a big following, and raves, for its model of including "by now" links at the end of reviews. If you buy a TV or projector or other item after reading the review, The Wirecutter gets a slice of the sale. Other websites are doing the same thing in other categories. It's nothing new. Back in the 2000s, Dell told PC World it could keep a slice of the revenue if it pushed links to Dell's online direct sales after its reviews. PC World did not take Dell up on the offer because of course once you're getting a cut of the sales action, you're no longer impartial.

Targeted government or corporate sponsorships: Here, we've had the likes of NZTE and Callaghan Innovation funding newspaper columns, or journalists (and Callaghan does sponsor one position at BusinessDesk, the newswire service used by NBR). The ideal, however, is for a sponsorship of editorial that's more philanthropic and more genuinely no-strings-attached. The Ford Foundation, for example, gave the LA Times a $US1 million grant to fund five journalists to cover immigration and ethnic community issues.

Crowdfunding: Data journalist Keith Ng asked for donations after his investigation into lax network security at MSD, and he deservedly received thousands. But Ng also conceded at the time that it's not realistic for crowdfunding to work more than a couple of times a year.

Adopt a zany name. APN took on the moniker "NZME.". (That full stop is supposed to be verbalised, so the idea was maybe that trendy Millennials would say "N-Z-M-E-dot". Don't shoot the messenger). Similarly, Tribune Publishing, the company behind the LA Times and the Chicago Tribune, has just changed its name to Tronc to undersocre the way it has adapted to the modern world ... or somefink. The chattering classes had a good chuckle. I'm not sure readers gave a stuff either way.


25 · Got a question about this story? Leave it in Comments & Questions below.

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25 Comments & Questions

Commenter icon key: Subscriber Verified

"RNZ doesn't ask them to pay" UNQUOTE - but of course, as taxpayers they ARE paying!
"Be entirely government-funded" UNQUOTE - or, to be more accurate, should of course read "Be entirely taxpayer-funded".
Which brings up an interesting point. Recently, a Greenpeace spokesman complained that (whoever-it-was) should not be given the task of investigating claims of fish-dumping, as it was a conflict of interest. Does Greenpeace, in a similar vein, complain about taxpayer funding of both radio and TV due to a conflict of interest? And if not, why not?

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Don't you think the specifics of "whoever it was" are sort of important when considering whether conflict of interest exists ? It is possible to assess whether a conflict of interest exists in practice - reality is not all hypothetical.

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No - Greenpeace says he has a conflict of interest, but then Greenpeace says whatever it needs to bolster any case it has - massive exaggeration is their metier.

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8) More excerpts from China Daily in Daily newspapers similar to what Fairfax are doing at the moment.
9)Journalists could actually work for Chinese newspapers. Every now and again I have seen experienced kiwi journos on China TV talking about NZ.

China wants to get its views across to NZ audiences and it probably is prepared to pay for that access.
The US plays the same game but most of us aren't aware of it, unless we read wikileaks or Russia Today.

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Its not surprising that good investigative journalism was not included in this article, as a point on saving media in NZ (a forgotten art-form). A lot of people still care about improving NZ through good journalism holding politicians, business, and government agencies to account. How many cats up a tree or sheep stories can the public be subjected to in the dumbing down of an already dumb nation.

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Hi Matt, a lot of people about good investigative journalism. But as per my first point, not as many as you or I would like to think, and only a subset of those will pay for it. CK

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Hi Chris

Thank you for your reply.

I don't believe at all that most NZ'ers dont want investigative journalism or aren't willing to pay for it. I would love a national poll to be taken on the subject.

The problem is the government has scared media outlets out of producing anything politically unsavoury for the government of the day, and corporate advertisers also cuddled up to the government threaten to pull their advertising if anything but popularist stories run, like celebrity citings and human interest rubbish. I know of journalists who were told by their editors that if you run stories such as child abuse rates in NZ you will be down the road - fact.

Doesn't the media itself have an ethical responsibility to investigate and publish a few stories that might benefit the nation? Or are media only driven by profit?

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Private media companies to have to make a profit to ensure their survival.

NBR, The Listener and Consumer (to name three local paywalled sites) can survive and thrive from subscriptions if they maintain quality journalism. Tens of thousands are willing to back them.

But a large, general news operation requires hundreds of thousands of subs to free itself from the mean online ad market and the type of churnalism it encourages. That's a stretch.

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Thanks Chris

Final question; Yes or No. Have you ever heard of the government and/or advertisers putting pressure on editors not to run bad news stories about NZ like worsening child abuse and family violence statistics?

Many thanks

Matt

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Not really my area but no.

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Isn't NBR's business model predominantly based on advertising?

Yeah you have a paywall but I suspect your advertising revenues outweigh those that come from subscriptions?

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Online, NBR moved to an ad-light model where we have just one ad on our home page, as viewed on a desktop, and none on the mobile version of our site (at this point). A majority of revenue comes from the paywall, and the aim is to increase the percentage of revenue that comes from readers.

It's worth noting that one of the advantages of a paywall is that it delivers a qualified audience -- that rarest of things online. Everyone's got a self-selecting online survey that claims their website has a high demographic; NBR ONLINE's audience is qualified by the blunt fact each member subscriber has the means to pay $280 a year. A qualified audience is worth more.

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Why are newspapers on the internet? If there is no money in it, because of ad blockers or whatever, what is the point?

Newspapers need to make money. Giving their product away for free won't do it.

If newspapers collectively took all of their publications off the internet, and produced only print editions, wouldn't people who do want news have to buy the print editions?

That is how it worked once. What has changed that means it won't work today? That later generations don't care about the news?

Well in that case, forget the whole thing. Invest your money in robots. They look set to inherit the world.

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Could the online paper not ask for koha at the end of their most deeply researched articles?
"These topics provide a public service but are expensive to produce If you.would like more of them...."
The rescue helicopters use this method.

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Scoop (and Keith Ng, mentioned above) has tried a variation on this method and raised around enough for half a journalist a year. Per-article payments have been tried and abandoned by various newspapers. The economics just don't stake up. Publishers and the staff who work for them need a degree of financial certainty for planning. Say, some regular monthly koha. Call it a subscription.

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Actually, there is no such thing as mainstream media anymore. The internet has dealt to that. Business and governments need to find a new way to ensure their message is heard. That is the challenge.

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No mention of a Flattr-type tipjar among those seven, and no mention of Blendle. A value-for-value approach seems to keep the No Agenda guys in business. Very interesting round up.

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Scoop (and Keith Ng, mentioned above) has tried a variation on a tipjar and raised around enough for half a journalist a year. Per-article payments have been tried and abandoned by various newspapers. The economics just don't stake up. Publishers and the staff who work for them need a degree of financial certainty for planning and that comes from subscriptions.

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In Para 6 Chris wrote:
"The Guardian is famously owned by the Scott Trust, which eschews profit in favour of reinvesting in better quality journalism (with a healthy serving of lefty op-ed)"
it's not a trust, it's a 'not for profit' limited company.
How do I know? My father was one of the settlors of tthe Scott Trust when it was set up in 1948 Scott Trust, which trust was converted to a limited company by its trustees in 2008, without consultation with the descendants of the settlors.
The Scott Trust Limited owns the Guardian Media Group, the income from whose investements is used to to cover the the losses of the Guardian and the Observer. These losses are running at a lkevel which cannot be supported in anything other than the short term.
"In recent years, international editions have been added, and the paper's global audience has become massive.
Yet the Scott Trust has lost bucketloads of money over the past few years. Last year, it lost more than £1 million a week"
One might arue that it is the newspapers which have lost the money, not the "trust".
"The trust is not inexhaustible."
Too right it's not.
" This year, it is slashing its funding by 20% or £53.6 million"
No it's not. That's not how it works.
"which will likely mean around 20% of jobs will go."
About tiume too - the newspapers have hired nearly 500 people since the Scott Trust became a limited company.
<don.montague@virgin.net>

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What about Press Reader? I pay $30 or so a month and am happy to do so for a 'newspaper' ads and all. I guess the publishers get Spotify like payments but I'm sure there's a bunch of boomers who would get on board. Is it presented as a subscription option?

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For "Spotify-like payments," publishers will read "very, very low"

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Yeah. That's what I meant.

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How about content relative to the reader, contrairy to the larger publishers who are scrambling to find new revenue streams hyper local privately owned newspapers are doing very well, for two reasons, no large corporate overheads to support and they are seen as a community newspaper reporting on their community, its simple realy

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Is the comments section the new crossword in the age of the online newspaper? Yes, there are the detractors who love to deride the comments section at the bottom of articles but I love a good comments thread, it can add a lot to the discussion. I always thought there is value in restricting access to the comments section. Make people create a profile (age, income, interests) so that newspapers can serve up targeted advertising in exchange for the privilege of reading and writing comments on articles.

I also thought that subscriptions, but not paywalls, would be the way to go. The free version could be ad-heavy, then offer people an ad-lite subscription version plus an ad-free premium subscription. There is so much discussion about the demise of news organisations that I'm sure there are people who would pay for a subscription just because they want to support good journalism.

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I don't see any mention of the patron model... See http://patreon.com for an example. I already support a number of artists to enable them to continue doing work that inspires them and, in turn, that I find gratifying to see/hear/read... It's a "pay what you can" model and I think it can be both viable and just... and cuts out the friction/drag of unnecessary middlemen...

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